Netflix shares touched $300 in July but at the market close on Monday they were $118. In a letter to investors, a contrite Reed Hastings, chief executive, said that many of the company’s “long-term members felt shocked” after the company increased prices by about 60 per cent, adding “more of them have expressed that by cancelling Netflix than we expected”.

The number of US Netflix subscribers fell in the quarter for the first time, with 23.79m people subscribing to the service, compared with 24.59m in the previous quarter.

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Netflix has been trying to shift its customers away from the DVD subscription service to the higher margin streaming business, and recently said it would separate the two businesses, rebranding the DVD business as “Qwikster” – only to abandon the plan weeks later.

Netflix users have cancelled their DVD subscriptions in droves but the company warned on Monday that the number of streaming customers had also fallen as customers with bundled subscriptions left the service. “Those subscribers are cancelling streaming, which reduces revenue and streaming subscriptions,” Mr Hastings wrote in his letter.

The pace of streaming cancellations had slowed, he added, although the company expects streaming cancellations to continue to fall until December when it expects a return to positive territory. The effect of these cancellations and the company’s uncertain outlook could be found in the broad earnings guidance range for the fourth quarter, with Netflix anticipating earnings per share to be $0.36-$0.70.

Revenues for the three months to September 30 were $821.8m, compared with $553.2m in the same quarter the previous year. Net income rose from $38m to $62.4m while earnings per share were $1.16, compared with $0.70.